Collections actions involving the sale of goods often include two varieties of “account” claims in addition to traditional breach of contract theories: “account stated” and “open account.” Generally, an account stated claim alleges the failure to pay an agreed-upon balance, while an open account claim alleges an agreement to hold open a line of credit over multiple transactions.
Courts and litigators alike have assumed for many years that the statutes of limitations for these account claims are the same as those applicable to breach of contract claims arising under the Uniform Commercial Code—four years. In July 2013, however, the Michigan Supreme Court overruled this approach in Fisher Sand and Gravel Co v Neal A. Sweebe, Inc. There, the Court held that these account claims are not subject to the four-year statute of limitations for breach of contract claims but, instead, are governed by a six-year statute of limitations.
Consequently, when filing a five-year old collections claim, it may be helpful to allege facts and present claims that support “account” theories, such as whether the parties agreed to a set amount through invoices (account stated) or agreed to an open line of credit (open account). Doing so could allow the plaintiff to pursue remedies previously thought to be time-barred.